Bank of America Targeted By Protesters And Investors As SEC Weighs Political Spending Rule

Bank of America Targeted By Protesters And Investors As SEC Weighs Political Spending Rule

WASHINGTON -- As the Securities and Exchange Commission considers requiring corporations to disclose their political spending to shareholders, a coalition of institutional investors and public interest groups are seeking to make next week's Bank of America shareholder meeting a flashpoint for getting corporate money out of politics.

Consumer watchdog Public Citizen and a host of activist groups are planning protests around several major shareholder meetings in the coming months, but the Bank of America meeting Wednesday will be among the most prominent. At the meeting, Trillium Asset Managment, a firm that manages $1 billion in environmentally friendly investments, will present a resolution that would bar the company from making contributions to politically oriented groups like the American Legislative Exchange Council and the U.S. Chamber of Commerce. BofA has given money to ALEC, but the Chamber is more secretive about its members, and it is not clear whether BofA has contributed to the Chamber or not.

In recent years, significant percentages of shareholders at some large companies have voted to require their firms to provide increased disclosure about the extent of their political donations, although none of these resolutions have passed to date. And Trillium views its more aggressive proposal to get BofA to end all political spending as intimately connected with a campaign pressuring the SEC to require disclosure.

"For the better part of the last decade, we've seen consistent and increasingly strong shareholder votes on political spending proposals," said Shelley Alpern, Vice President of Shareholder Advocacy for Trillium. "A growing number of investors consider this area to be a material factor in evaluating the financial worth a company and the strength of its governance mechanisms. Investors will be better off when the SEC requires disclosure from all publicly traded companies. Companies deserve a level playing field and investors need the information."

Trillium's efforts to push BofA's money out of politics coincide with a major protest of the meeting being organized by a host of good government and consumer-rights groups, including National People's Action, The New Bottom Line, Rainforest Action Network, North Carolina Coalition Against Corporate Power, Common Cause, Action North Carolina, Jobs with Justice, Right to the City and Unity Alliance. Organizers anticipate significant turn out from east coast Occupy enclaves in New York, Atlanta, Ashville, N.C., and Charlotte, N.C. -- BofA's headquarters. Another institutional investor, the American Federation of State County and Municipal Employees Pension Plan, will initiate a separate vote that would force BofA to disclose its political spending at the same meeting.

Public Citizen supports Trillium's resolution. "We don't think corporations should play in politics, both because it's bad for democracy and because it's bad for their own bottom line," said Lisa Gilbert, deputy director of Public Citizen's Congress Watch.

The city of Charlotte is preparing for the protest with a preemptive civil liberties crackdown that will likely provide some insight into the city's tactics for coping with the Democratic National Convention in September. Under the rules, protesters can be arrested or searched for carrying bags with the "intent" to conceal any of a host prohibited items, which range from weapons to commonplace markets. Wearing a scarf with the intent to conceal one's identity is also grounds for arrest under the rules.

Although Charlotte has long been nicknamed "The Wall Street of the South," it has rarely been a prominent destination in Democratic Party politics. The party leadership's decision to hold its convention in the banking mecca has been criticized by many Democrats who believe big banks and financial interests are not currently supportive of the party or its economic policies.

Up in Washington, there is also some support in the SEC for companies to disclose their political spending to shareholders.

"The Commission should provide for disclosure of corporate political expenditures," SEC Commissioner Luis Aguilar said during a February speech. "Investors are not receiving adequate disclosure, and as the investors' advocate, the Commission should act swiftly to rectify the situation by requiring transparency."

While the Supreme Court's Citizens United decision barred the government from restricting political expenditures by corporations, it explicitly permitted the government to require transparency, and allowed shareholders to demand more stringent actions against individual firms.

Resolutions requiring major CEOs to change the way they operate their companies rarely pass. While millions of citizens own small stakes in big companies through their retirement plans, most are passive or even unaware of their investments. When firms host annual meetings, large money managers like hedge funds and banks are tasked with voting on behalf of their clients. Such firms are reluctant to favor changing a company's operations. Shareholder advisory companies like Glass Lewis & Co. and Institutional Shareholder Services provide recommendations to these large investment houses, but generally shy away from recommending voting for overtly political or social resolutions.

In addition to the Bank of America meeting on Wednesday, Trillium will float similar proposals at a meeting on Tuesday for 3M, a multinational chemical and consumer product conglomerate, and Target's meeting in June. New Bottom Line and other consumer groups are targeting 40 major shareholder meetings with protests this year.

Bank of America's management team opposes both resolutions on political spending. It even challenged the legality of Trillium making the proposal to shareholders by appealing to the SEC, which upheld Trillium's right to force a vote on political spending by fellow BofA shareholders.

In materials distributed to shareholders, BofA board members argued that the firm's political expenditures are in the best interests of its shareholders and customers.

"We regularly communicate with and express our policy positions and concerns to policymakers, public officials and regulators at the federal, state and local levels, in order to protect and advance the long-term goals and interests of our company, customers and stockholders," the BofA board said. In the same set of materials, the board said BofA should not be required to disclose political expenditures to stockholders, saying that doing so would be "unnecessary" and "provide our stockholders with little, if any, meaningful information."

More than 178,000 people disagree, however. That's the number of comment letters the SEC has received to date demanding that the agency require disclosure of political expenditures. Supporters include some major figures in finance, most notably John Bogle, founder of Vanguard Group, one of the world's largest investment firms, responsible for trillions of dollars in client funds.

While Commissioner Aguilar has also endorsed disclosure, the SEC has not formally begun writing any rules on the matter, and it is not yet clear if other commissioners would support the measure.

Correction: A previous version of this article stated that the Trillium resolution would prevent Bank of America from lobbying. It would not. Instead, the proposal would prevent the company from making donations to third party organizations that conduct political operations.

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